Financial Trauma: The Silent Struggle Behind Missed Payments
By Jennifer Esperanza, Senior Director of Organizational Culture and Strategy
March 1, 2025
Imagine this: a longtime member has defaulted on her car loan payments twice in the last year. This seems unusual, as her financial history has otherwise been stellar. She makes a good salary as a government worker, and she’s had an account with the credit union for close to a decade. She took out a smaller, credit builder loan a couple of years ago, which she repaid dutifully and without incident. Your recent attempts to reach out to her by phone calls, emails and mail about the missed car payments have been ignored.
Like Post-Traumatic Stress Disorder (PTSD), financial trauma (FT) can appear in many forms, including anxiety, avoidance, depression, hypervigilance, isolation, and anger. Many people don’t realize that financial anxiety can be a form of trauma, largely because "trauma" is often associated with extreme or life-threatening events like car accidents, physical harm, or the horrors of war.
But financial trauma is very real, and credit union staff should be mindful of its impact. Like other forms of trauma, financial trauma can stem from various experiences, such as a sudden job loss, an abusive partner or relative who exerted strict control over finances or growing up in poverty, which can erode confidence in managing money as an adult.
FT can also be intergenerational—the poverty experienced by our parents or grandparents can manifest in their descendants’ extreme behaviors: overspending, hypervigilance with money, avoiding anything to do with finances and more. Withholding judgment and meeting our members where they’re at is the best first step we can take toward assisting those experiencing FT.
It's important to train your staff to recognize the signs of financial trauma—not only in your members but also in themselves. Building trust with those experiencing FT starts with avoiding judgmental comments and offering thoughtful solutions they may not realize are available, such as debt consolidation or renegotiating payment structures. Identifying financial trauma is just one of the many staff training programs Coopera provides for credit unions. Contact us today to learn more!